Owing on your home isn't all bad

Friday

Jan 11, 2013 at 12:01 AMJan 11, 2013 at 11:38 AM

Almost 1 million Ohioans don't have to worry about mortgage rates or foreclosure problems. They own their homes outright. A new study by the online real-estate listing and information service Zillow finds that 30 percent of Ohio homeowners and 29 percent of homeowners nationwide are free of a mortgage.

Jim Weiker, The Columbus Dispatch

Almost 1 million Ohioans don’t have to worry about mortgage rates or foreclosure problems. They own their homes outright.

A new study by the online real-estate listing and information service Zillow finds that 30 percent of Ohio homeowners and 29 percent of homeowners nationwide are free of a mortgage.

In central Ohio, however, the story is very different. About 100,000, or 21.7 percent, of Columbus-area homeowners have shed a mortgage — the lowest rate in the state.

That might not be a bad thing.

The study finds that homeowners are more likely to have a mortgage in areas where the economy is healthiest because such areas tend to have higher home values coupled with younger and more-transient populations.

“It’s counterintuitive,” said Jim Newton, an economist with Commerce Bank. “The Columbus metro area compared to lots of other areas around the country continues to have a healthy economy and reasonably good job growth. Therefore people here are much more likely to continue to refinance or afford a new home.”

On the other end, homeowners without mortgages are more likely to be found in states with older populations, lower home values and slower job growth, such as West Virginia, Louisiana and Arkansas. In West Virginia, which leads the nation in paid-off mortgages, 45 percent of homeowners are free of home debt.

A similar pattern plays out in Ohio, where more mortgage-free homeowners can be found in areas with the highest unemployment and lowest home values.

In Meigs County, where unemployment is stuck in double-digits and home values are exceptionally low, half of homeowners own their home free and clear.

In Delaware County, with much higher home values and less than 5 percent unemployment, only 16.9 percent of homeowners are without a mortgage.

“If you have a lot of job growth in an area, it attracts a lot of employees,” said Svenja Gudell, a senior economist with Zillow who was involved in the study. “When they move to the area, there is a demand for housing in that area, and that drives up pricing, so you see a lot of new developments popping up to accommodate new demand (and with) those houses will be more mortgages."

Not surprisingly, the study also found that older homeowners are more likely to own their homes without debt: 63 percent of those 74 to 84 years old own their homes, and 78 percent of those 85 or older do.

The one exception is the youngest group of owners. About 35 percent of those20 to 24 own their home outright, a number that surprised Gudell.

“There’s quite a spike there. Maybe that’s trust funds or folks who got assistance from their parents to buy a home or young millionaires,” she said.

Zillow’s findings are consistent with the U.S. Census Bureau. In 2010, the census found that about 33 percent of homeowners had no mortgage. In Franklin County, the figure was 21.2 percent.

The number of homeowners who carry a mortgage has hovered between 60 percent and 70 percent for the past 30 years, after rising from 45 percent in 1940.

jweiker@dispatch.com

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